When a fundamental Constitution-proclaimed civil right, the right to a paid annual leave included, sprang under a legislation that was subsequently amended, the passage of a retroactive piece of legislation that is detrimental to the right-holder violates the principles of the state committed to the rule of law.
The negative limitation provided for vis-à-vis the right to a paid annual leave does not come in conflict with the Constitution if the legal limitation is prospective.
The President of the Republic challenged the constitutionality of and the compliance with international treaties to which Bulgaria is a party and the conformity with EU law of § 3f of the Labor Code – LC (§ 20, item 2 of the Act Amending the Labor Code – AALC, DV, No 58/2010) and § 8а of the Civil Service Act – CSA (§ 21, item 5 of the AALC). This challenge was joined to another challenge that was brought by 51 Members of the 41 st National Assembly and that contested the constitutionality of and the compliance with international treaties to which Bulgaria is a party of the texts that the President challenged and in addition, of Art. 176, para 3 of the Labor Code (§ 8 of the AALC); Art. 224, para 1 of the LC (§ 11 of the AALC); Art. 59, para 5 of the Civil Service Act (§ 21, item 3 of the AALC); Art. 61, para 2 of the CSA (§ 21, item 4 of the AALC).
1. § 3f of the Labor Code reads thus: ,, The paid annual leave for previous years which has not been used by January the 1st 2010 shall be used till the 31st of December 2011.”
The right to a leave is a fundamental Constitution-granted right to workers and employees (Art. 48, para 5 of the Constitution), and relates directly to the Constitution-proclaimed right to work (Art. 48, para 1 of the Constitution). In the scale of social rights these rights are essential for an individual's quality of life and fulfillment.
The leave is the period over which the worker or employee shall be free of the obligation to provide their labor force to an employer, respectively, to an administrative body. Among the different types of leave, the paid annual leave is paramount owing to its purpose which is to let the worker or employee regain their labor force. The paid annual leave is an element of the employment relationship. For the worker or employee the paid annual leave is an individual right and for the employer, the other party to the relationship, the paid annual leave is an obligation to release the worker or employee of his/her duty to provide their labor force and also freedom to judge when the leave is to be taken. The right to a paid annual leave originates upon the employment relationship commencement whereas the right to take a paid annual leave is, as a rule, based upon the required length of service.
§ 3f of the Labor Code is intended to resolve the use of any unused paid annual leave for previous years and fixes the 31st of December 2011 as the deadline for using it. The right to this paid annual leave sprang under a previous legal regime, i.e. § 3f of the LC affects already acquired rights. This means that whenever, as the case might be, it is impossible to use the paid annual leave for previous calendar years, the right to use the leave will be taken out – both the right to real use of the paid annual leave as long as the employment relationship exists and the right to compensation for the unused paid annual leave under Art. 224 of the Labor Code. The worker or employee will be divested of an acquired right; the consequent advantages will stay in another legal domain and will favor another subject of law.
§ 3f of the Labor Code makes a legal reassessment of the consequences of a right that sprang under a different legislation. A general principle is breached, viz. that laws shall not be retroactive and in the case dealt with, the withdrawal of rights (Decision № 8 on Constitutional Case № 4/1999), particularly when the status quo ante cases will have detrimental consequences.
§ 3f of the Labor Code does not withdraw the right to a leave but is detrimental to the right to use the paid annual leave to which workers and employees were entitled under a legislation where there was no limitation to the right to use the leave. Thus the right to use the paid annual leave that was not used by 1 January 2010 is restricted. In this way § 3f of the LC comes in conflict with Art. 48, para 5 of the Constitution in relation to Art. 16 and Art. 48, para 1 of the Constitution. In that sense the right-holder is restricted to exercise a right and this is in contravention of Art. 57, para 1 of the Constitution.
Even when it is assumed that the substantive civil law may, by way of exception, be retroactive, this should not apply to fundamental Constitution-proclaimed rights like the right to a leave under Art. 48, para 5 of the Constitution. There exists no reason to resort to Art. 57, para 3 of the Constitution which provides for a temporary curtailment of the exercise of individual civil rights.
Whenever a fundamental civil right is unable to entail legal consequences provided for in the legislation existing as of the day on which this right sprang and a retroactive legal arrangement provides for consequences to the detriment of the right-holder, legal certainty and predictability are defied. These are crucial elements in the substance of the state committed to the rule of law and guarantee the individual's rights and free human development. § 3f of the LC is discordant with Art. 4 of the Constitution as it violates the principles of the state committed to the rule of law.
The principle of the welfare state is likewise violated (item 5 of the Preamble of the Constitution) as workers and employees, being a party to an individual employment relationship, are dependent on (subordinate to) the employer and are, in economic terms, the weaker party to a contract governed by private law. It is up to the employer to organize the work and to see that the paid leave schedule is observed and thus ensure time for rest and leisure. On these grounds it is inadmissible to pass amendments to the legislation with detriments to the workers and employees as a result of the allegation that a change occurred in social relations.
2. Regarding § 8а of the CSA whose text and substance are identical with § 3f of the LC, the same arguments of unconstitutionality hold true and thus it conflicts with Art. 48, para 5, Art. 16, Art. 48, para 1, Art. 4 and item 5 of the Preamble of the Constitution.
3. The challenged Art. 176, para 3 of the LC (§ 8 of the AALC) reads thus: ,, The workers' and employees' right of paid annual leave shall be subject to a limitation after a period of two years following the end of the year for which the said leave is due. In those cases where the annual paid leave has been postponed under the terms and the procedure of para 2, the right of annual paid leave of the worker or employee shall be subject to a limitation after a period of two years following the end of the year during which the hindrance to use the leave has disappeared.”
Limitation is a legal institute of law. Prior to 1 January 1993 it was incorporated into the Labor Code.
The term of limitation is a result of the right-holder's omission. Art. 176, para 3 of the LC is to be interpreted as a limitation to the exercise of the right to a leave and not as a limitation of the right to a leave itself.
The term of limitation is a matter of the State's legal policy; it stimulates the exercise of rights and it is not discordant with Art. 4, Art. 16, Art. 48, para 1 and para 5 of the Constitution. The limitation that Art. 176, para 3 of the LC provides for will be valid henceforth.
4. The challenge included also Art. 224, para 1 of the LC (§ 11 of the AALC, in force from 1 January 2012) which reads: ,, Upon termination of the employment relationship the employee shall be entitled to a cash compensation for the unused paid annual leave for the current calendar year in proportion to the time recognized for length of service and for the unused paid annual leave postponed pursuant to Art. 176, the right to which has not lapsed.”
The entitlement to compensation upon termination of the employment relationship is a substitute for the unused paid annual leave and exists inasmuch as the worker or employee is entitled to a paid leave. The analysis of Art. 224, para 1 of the LC shows limitations on the entitlement to a compensation – only for the current calendar year and for unused leave postponed pursuant to 176 of the LC. The reasons for not using the paid annual leave within the limitation period may vary – for instance other types of leave were taken (official, creative, student). These cases are not subject to the two-year limitation term. The legislating authority did not incorporate any text to indicate a period over which the worker or employee is active or passive vis-à-vis the exercise of this right. The worker or employee can exercise his or her right to a paid annual leave by 31 December of the respective calendar year; however, reckoned from 1 January of the next calendar year the right lapses and the cash compensation under Art. 224, para 1 of the LC is not due. Art. 224, para 1 of the LC contradicts Art. 176, para 3 of the LC and that internal contradiction spoils the precision of the employment relationship regulation and creates legal uncertainty. This contradiction between the substance of the two legal norms is essential and sufficient by itself to pronounce Art. 224, para 1 of the LC unconstitutional for its violation of the principles of the state committed to the rule of law. Along with that Art. 224, para 1 in the part that pertains to the criteria to determine the period for which a cash compensation is due, disagrees with Art. 48, para 5 of the Constitution in relation to Art. 16 and Art. 48, para 1 of the Constitution. A worker or employee who falls short of the criteria provided for in the text is disentitled of the cash compensation though the unused paid annual leave has not lapsed. Hence the Constitutional Court's ruling about the unconstitutionality of Art. 224, para 1 in the part: „… for the current calendar year in proportion to the time recognized for length of service and for the unused paid annual leave postponed pursuant to Art. 176”.
5. Art. 59, para 5 of the Civil Service Act likewise reads that a civil servant's right to a paid annual leave shall expire two years after the end of the year for which the leave is intended. On the basis of the arguments adduced in point 3 the Constitutional Court disagreed with the claim that Art. 59, para 5 of the CSA is unconstitutional.
6. Art. 61, para 2 of the CSA (§ 21, item 4 of the AALC – in force from 1 January 2012) reads thus: ,, Upon termination of the official legal relation the civil servant shall be entitled to a cash compensation for the unused paid annual leave for the current calendar year in proportion to the time recognized as civil service, and for the unused leave, postponed pursuant to Art. 59, the right to which has not lapsed.”
The provision of Art. 61, para 2 of the CSA is analogical to that of Art. 224, para 1 of the LC. On the grounds of the arguments in point 4, that provision is unconstitutional in the part that divests civil servants of the entitlement to a cash compensation for any unused paid annual leave the right to which has not lapsed.
7. International law instruments determine the general frame of the right to a leave. Art. 24 of the Universal Declaration of Human Rights reads thus: ,, Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay.” The challenged § 3f of the LC and § 8а of the CSA deprive workers and employees (on an employment contract) and civil servants (in official legal relations under the CSA) of the possibility to exercise their right to a paid annual leave and by doing so are incompatible with recognized international law standards.
Art. 7 (d) of the International Covenant on Economic, Social and Cultural Rights reads thus: ,, The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favorable conditions of work which ensure, in particular: . .. (d) Rest, leisure and reasonable limitation of working hours and periodic holidays with pay” whereas Art. 2 (2) of the same Covenant reads that ,, The States Parties to the present Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discrimination of any kind.” The said provisions provide for the right to a leave and make it binding to make sure that this right is exercised. It is in the second part – the exercise of the right to a paid annual leave – that § 3f of the LC and § 8а of the CSA are dissonant with the quoted Covenant articles.
§ 3f of the LC and § 8a of the CSA are discordant with Art. 2 of the ILO C52 Holidays with Pay Convention, 1936. Art. 224, para 1 of the LC and Art. 61, para 2 of the CSA are discordant with Art. 6 of the said Convention in the part regarding payment of compensation in cash for unused paid annual leave upon the termination of the contract of employment owing to the impossibility to exercise the right to compensation whenever the right to a leave has not elapsed.
Art. 2 (3) of the European Social Charter (revised) reads that ,, With a view to ensuring the effective exercise of the right to just conditions of work, the Parties undertake:… (3) to provide for a minimum of four weeks' annual holiday with pay” whereas Article F (1) and Art. G (1) provide for the derogations and restrictions in time of war or public emergency. § 3 f of the LC and § 8а of the CSA deprive workers and employees of the chance to effectively exercise the right to a leave providing there exist no circumstances for derogations or restrictions. Hence the incompatibility of these two texts with the said articles of the European Social Charter.
§ 3f of the LC and § 8а of the CSA disagree with Art. 31 (2) in relation to Art. 52 (1) of the Charter of Fundamental Rights of the European Union reading that ,, every worker has the right to an annual paid leave”. The restriction of the rights that the Charter recognizes must respect the core of these rights. The argument is that workers and employees are deprived of the possibility to exercise an acquired right – the right to a leave. The said texts are dissonant with Art. 7 of Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organization of working time that makes it binding on the Member States to take the measures necessary to ensure that every worker is entitled to a minimum period of paid annual leave that may not be replaced by an allowance in lieu, except where the employment relationship is terminated.